Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, will combine its European short-haul operations outside its main Frankfurt and Munich hubs with the Germanwings low-cost unit as part of a cost-reduction effort.
The new unit will begin operations in January and fly 18 million passengers annually, Cologne, Germany-based Lufthansa said late Wednesday. Former Chief Executive Officer Wolfgang Mayrhuber and former Chief Financial Officer Karl-Ludwig Kley have been nominated to join the supervisory board next year, with Mayrhuber taking over as chairman, the airline said.
Lufthansa has a companywide goal of saving 1.5 billion euros ($1.96 billion) through 2014 under a reorganisation programme dubbed Score. The company is cutting 3,500 jobs in administrative and as many as 1,000 catering slots may be eliminated. The programme has already helped improve earnings, with second-quarter operating profit increasing 28 percent to 361 million euros and exceeding analyst estimates.
“Combining our domestic German and European point-to-point services has enormous potential to improve efficiency,” CEO Christoph Franz said in a statement. “Our aim is to once again fly these services profitably under the umbrella of a single company.”
Lufthansa is predicting full-year operating profit in the “mid-three-digit million-euro range,” excluding restructuring costs of 100 million euros to 200 million euros.